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Los Angeles - June 14, 1954 8 0 - 11 Mr. Win. Reinhardt: (cc - Mr. W. R. Rouse Mr. R. M. Sutton ) In connection with our dispute with the Las Vegas Valley Water District relative to the inclusion in the purchase price of some $18,00 0 for flt*e hydrants which were a donation: You will recall that the accountants for the District questioned the Inclusion of such an amount in the cost, overlooking the fact that Section 9(c) of the contract provides that there should be added to the basic purchase price "the amount charged to invest­ment account by the Water Company * * * . " The cost of these fire hydrants, although a donation, is charged to the investment account, and under the terms of the con­tract it should properly be included. I had a talk with Mr. Hamilton this morning and he stated he had discussed the matter with Mr. Beebe and they both felt that technically and legally such an item was properly Included under the terms of the con­tract; but that they felt that possibly if the question was litigated and a suit brought to reform the contract, there was a possibility of the District winning such a law suit owing to the fact that such a charge was morally and equitably improper, and the inclusion of such an amount was not contemplated by the parties at the time the contract was made. I am not convinced that the District could succeed in such a law suit, but I am passing on to you this information. Mr. Hamilton further advised me they were writing an opinion to the District substantially as I have indicated above. E. E. Bennett EEBips